Sales and Use Tax Annotations

Annotation 330.2877

(a) IN GENERAL

330.2877Sublease Out of State. A prime lessor, who is a manufacturer, leases computer equipment to a California firm and charges use tax on the rentals. The California firm subleases the property to an Arizona firm and claims a tax paid purchase resold deduction. Since the California firm cannot change methods of reporting tax after the lease commences, no such deduction is allowable nor can a belated resale certificate be issued.

However, since a lease that is a continuing sale is subject to California use tax only for periods the property is inside this state, the lessor may file a claim for refund for periods the leased property was located outside California. 4/13/90.

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